Visa Is Leading the Dow Rally Today — Is It a Buy?

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Nearing the final hour of trading, Visa (V 7.21%), the largest payments processing company in the world, lead the rally in the Dow Jones Industrial Average, which was up about 320 points as of 2:50 p.m. ET today. Visa’s stock traded 7.3% higher.

Investors piled into Visa after the company reported earnings results for its second fiscal quarter of 2022 ending on March 31, which impressed the market. 

Visa reported $1.79 in non-GAAP (adjusted) earnings per share on revenue of $7.2 billion in the quarter, both numbers that beat analyst estimates. Total payments volume in the quarter rose 17% from the first quarter of 2021, while total cross-border payment volume jumped 38%, as travel and entertainment spending continued to rebound.

Image source: Getty Images.

“We had a very strong quarter amid the invasion of Ukraine and our decision to suspend operations in Russia,” Visa CEO Alfred Kelly Jr. said in a statement, adding, “we expect continued growth driven by a robust travel recovery and through the enablement of traditional and newer ways to pay globally.”

Visa CFO Vasant Prabhu said the suspension of its Russian operations is expected to cut revenue in the second half of the year by 4%.

However, Prabhu also said the company is projecting revenue growth in the third fiscal quarter to increase at the higher end of the mid-teens percentage range. One analyst noted that the company looks to be “far exceeding” its prior outlook. Prabhu said this is largely due to the fact that cross-border volumes are coming in much better than expected.

This is certainly good news for the company because, despite further outbreaks of COVID-19, the world seems to be settling into life after the pandemic and dealing with new outbreaks in stride. It’s also great that the company is providing such a strong outlook despite the headwinds from Russia.

Trading at about 30.6 times forward earnings, Visa is at the lower end of forward earnings multiples it has historically traded at. With travel and entertainment looking resilient despite new COVID-19 outbreaks, and digital payments accelerating, I think Visa is in a very solid position right now.